Hey Guys,
I am stuck ,,, please provide me a valid solution keeping in mind the AS & IFRS in regards to this....
I have an Asset named General Equipment having an estimated life of 10yrs.... but I want to depreciate it for 5 yrs keeping the rate of depreciation unaltered...
Can u plz provide a valid solution to with with the explanation...
Hi Gunjan,
I assume the physical life of the asset is 10 years, but however there are circumstances under which Depreciation can be provided for less than physical life is the useful life is less than physical life. Physical life for the General Equipment is 10 years and the useful life is 5 years. You could charge depreciation for 5 years provided your need lies in any of the below mentioned factors:
i) any legal or contractual obligations
ii) directly governed by extraction or consumption
iii) depends on the extent of physical deterioration on account of usage
iV) change in technological conditions
v) change in market demand for product
vi) legal or other restrictions
Thanks
Rathna
CAclubindia
